Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment. The omitted portions, marked by [****], have been
separately filed with the Commission.
EXHIBIT 10.12
SERVICES AGREEMENT
This Agreement is effective this 13th day of September, 1996, (the
"Effective Date") between Patient Infosystems, 00 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxx Xxxx 00000 ("Vendor") and Health Resources,Inc. under the terms set forth
below.
A. SERVICES
Vendor will provide the product(s) or service(s) set forth in the
proposal incorporated herein as Exhibit A.
The product and all elements as set forth in Exhibit A are subject to
prior approval by Health Resources, Inc., such approval not to be
unreasonably withheld.
B. COMPENSATION
1. Health Resources, Inc. shall pay Vendor an operational fee of [****]
in the program described in Exhibit A.
2. Health Resources, Inc. shall pay Vendor for pre-printed materials
(e.g. marketing brochure, business reply mailer, program description)
required for the program. Vendor will furnish estimates for printing costs
upon determination of volumes and specifications.
3. All amounts due under this agreement shall be invoiced monthly to
Health Resources, Inc. by Vendor and payable within thirty days of the date
of the invoice. Payments exceeding thirty days past due shall be subject to
a service charge of [****] per month until paid.
4. In the event that Health Resources, Inc. shall request any changes in
the specifications or scope of the services described in Exhibit A
hereto, Vendor will notify Health Resources, Inc. of the cost of such
revisions and will not proceed without prior written approval.
C. CONFIDENTIALITY
1. Health Resources, Inc. and Vendor acknowledge that certain
confidential and proprietary information may be disclosed by one of them
to the other in the course of this Agreement. For purposes of this
Agreement, the term "Confidential Information" includes the following: (a)
All information regarding the patient, Health Resources, Inc's. Customer,
any patient medical data and/or status, or provider information; and (b)
any other information identified as confidential in writing by the
disclosing party prior to disclosure. Notwithstanding the confidentiality
requirements of this Agreement, the foregoing shall not prevent Health
Resources, Inc. from retaining information, including any and all
information and data pertaining to any patient which comes to Health
Resources, Inc. or to which Health Resources, Inc. is given access during
this Agreement.
2. Should Health Resources, Inc. receive confidential information of
Vendor for use in performing their Services, Health Resources, Inc.
agrees to take all reasonable steps to safeguard the confidentiality of
said information and to prevent unauthorized disclosure thereof by Health
Resources, Inc.'s employees, agents and representatives. Health
Resources, Inc. shall maintain strict security procedures to protect the
confidentiality of any information received, stored, or delivered on
patients in the Health Resources, Inc. or any affiliated or associated
company's database.
-1-
3. The data released hereunder to Vendor regarding patients, patient
medical data, Health Resources, Inc. Customers, and provider information,
is considered sensitive and confidential information. Vendor warrants that
it shall use any information provided by Health Resources, Inc. strictly
for the performance of this Agreement. Vendor acknowledges and agrees to
take all necessary steps to safeguard the confidentiality of all
information and reports, whether oral or written, maintain such information
as strictly confidential and to prevent unauthorized disclosure thereof by
Vendor's employees, agents, representatives and other third parties. Vendor
warrants that all such information and reports will not be disclosed to
any person, organization or entity other than Health Resources, Inc.
4. Each party shall hold the other party, its affiliated companies, the
officers, agents, employees, and independent contractors of the other
party, harmless and shall indemnify and defend such party for any claim
of expense or damage, whatsoever, resulting from the publishing or
release by such party, of information contrary to the above conditions.
5. The obligations of the Paragraph shall not apply to any Confidential
Information which the recipient can demonstrate is or becomes available
to the public through no breach of this Agreement.
6. Neither party to this Agreement shall, except as may be required by
law or federal regulation, or except with express written permission of
the other party, disclose the terms and conditions of this Agreement to
any third party or publicly advertise its contents.
7. The parties agree that Vendor's breach of any of its material
obligation under the applicable Confidentiality provisions of this
Agreement, may cause Health Resources, Inc. irreparable injury for which
it would not have adequate remedy at law, and that Health Resources, Inc.
shall be entitled to specific performance or preliminary or other
injunctive relief in addition to any and all remedies it may otherwise be
entitled to at law or in equity.
8. This Paragraph shall survive the termination of this Agreement.
Vendor shall not duplicate any material containing Health Resources, Inc.
Confidential Information, except in the direct performance of its
services under this Agreement. Vendor shall return all copies of
materials containing Health Resources, Inc. Confidential Information upon
Vendor's completion of services under this Agreement or upon any
earlier termination of this Agreement for any reason whatsoever.
D. INDEMNIFICATION
D1. Each party shall indemnify and hold the other party harmless from and
against all liability, damages, penalties, losses, costs or expenses,
including reasonable attorneys' fees, arising from or in any way related to
its willful or negligent actions or omissions in performing the
responsibilities as described in this Agreement.
D2. "Limitation of Liability"
Neither Health Resources, Inc. nor vendor shall in any way be liable for
any special, indirect, exemplary,incidental or consequential damages,
whether based on contract, tort, or any other legal theory, even if Health
Resources, Inc. or vendor has been previously advised of the possibility
of such damages. This paragraph shall survive the termination of this
agreement.
-2-
E. PROFESSIONAL STANDARDS
Vendor represents that it has facilities, personnel, experience and
expertise sufficient in quality and quality to perform all such
assignments and projects given it by Health Resources, Inc. hereunder and
agrees that it will perform all such assignments and projects in a manner
commensurate with professional standards generally applicable to its
industry.
F. OWNERSHIP OF MATERIALS
The parties acknowledge that any modifications to the printed materials
produced by its asthma program for Health Resources, Inc. are being
created at the insistence of Health Resources, Inc. and shall be deemed
"work made for hire" under the United States copyright law.
Health Resources, Inc. shall have the right to use the whole work, any part
of parts thereof, or none of the work, as it sees fit. Health Resources,
Inc. may alter the work, add to it, or combine it with any other works, at
it sole discretion. Notwithstanding the foregoing, all original material
submitted by Vendor as part of the work or as part of the process creating
the work, including but not limited to listings, printouts, documentation,
notes, reports, shall be the property of Health Resources, Inc. whether or
not Health Resources, Inc. uses such material. No rights are reserved by
Vendor.
All surveys and reports prepared by Vendor in connection with the
performance of its services hereunder will become and remain Health
Resources, Inc.'s sole property.
Vendor agrees it will not disclose to any third party, without the prior
written consent of Health Resources, Inc., any proprietary or confidential
information acquired from Health Resources, Inc. under this Agreement,
including trade secrets, business plans and confidential or other
information which may be proprietary to Health Resources, Inc..
Vendor warrants and represents that it has or will have the right, through
written agreements with its employees, to secure for Health Resources,
Inc. the rights called for in this Section. Further, in the event Vendor
uses any subcontractor, even though subcontracting is not permitted by this
Agreement, or other third party to perform any of the services contracted
for under this Agreement, Vendor agrees to enter into such written
agreements with such third party, and to take such other steps as are or
may be required to secure for Health Resources, Inc. the rights called for
in this Section.
G. DURATION OF AGREEMENT
1. Term
This Agreement is effective as of the Effective Date and shall continue
in full force and effect until the earlier of (i) completion of the project
assigned hereunder, (ii) terminated by at least one hundred eighty (180)
days written notice by either party to the other, sent by registered mail
to the address for each party first set forth above, or to such other
address which a party may designate for its receipt of notices hereunder.
This Agreement may be terminated by Health Resources, Inc. immediately in
the event Health Resources, Inc. is unable to obtain waivers from its
customers regarding Vendor's services.
-3-
2. Payment on Termination
Upon termination of this Agreement Health Resources, Inc. is to pay for all
authorized work in process.
3. Transfer Upon Termination
Vendor shall transfer, assign and make available to Health Resources, Inc.
or Health Resources, Inc.'s representative all property and materials in
Vendor's possession or control and any copies thereof belonging to and paid
for by Health Resources, Inc., and all information regarding Health
Resources, Inc.'s project(s) covered by this Agreement, as set forth in
Paragraph C herein.
4. Neither Health Resources, Inc. nor Vendor shall be liable to the other for
damages of any kind, including but not limited to lost profits or incidental,
punitive or consequential damages, relative to termination of this Agreement
in accordance with Section 6.2, even if advised of the possibility of such
damages.
H. INDEPENDENT CONTRACTORS
Vendor shall at all times be an independent contractor and shall so represent
itself to all third parties. Nothing in this Agreement shall be deemed to
constitute either party the agent or legal representative of the other nor to
constitute the parties as partners, agents or joint ventures of one another.
I. THIRD PARTY OBLIGATIONS
In connection with this Agreement, Vendor shall make no commitments or
disbursements, incur no obligations nor place any advertising, public
relations or promotional material for itself, Health Resources, Inc.'s,
subsidiaries or affiliate companies, nor disseminate any material of any kind
using the name of Health Resources, Inc. and/or Health Resources, Inc.'s such
parent, subsidiary or affiliate companies or using their trademarks, without
the prior written approval of Health Resources, Inc.
J. GOVERNING LAW
This Agreement is entered into in the State of New York and shall be
constructed and governed under and in accordance with the laws of that State.
K. MISCELLANEOUS
1) The terms of this Agreement shall be binding upon Health Resources, Inc.
and Vendor and their respective successors and permitted assigns.
Notwithstanding the foregoing, this Agreement is not assignable in whole or
in part by Vendor without the prior written consent of Health Resources, Inc.
2) The failure of either party to take action as a result of a breach of this
Agreement by the other party shall constitute neither a waiver of the
particular breach involved nor a waiver of either party's right to enforce
any or all provisions of this Agreement through any remedy granted by law or
this Agreement.
-4-
3) This Agreement contains the entire understanding of the parties with
respect to the subject matter contained herein, supersedes any prior written
or oral communications and may be modified in writing subject to mutual
agreement of the parties hereto.
4) The headings of each paragraph are for reference only and shall not be
construed as part of this Agreement.
5) Except for the obligation to pay money property due and owing, either
party shall be excused from any delay or failure in performance hereunder
caused by reason of any occurrence or contingency beyond its reasonable
control, including, but not limited to, failure of performance by the other
party, earthquake, labor disputes, riots, governmental requirements,
inability to secure materials on a timely basis, failure of computer
equipment, failures or delays of sources from which information or data is
obtained and transportation difficulties.
-5-
IN WITNESS WHEREOF, the parties hereto, each by a duly authorized officer,
have entered in to this Agreement this 13th day of September, 1996.
Health Resources, Inc. Patient Infosystems, Inc.
00 Xxxxxx Xxxx 00 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000 Xxxxxxxxx, Xxx Xxxx 00000
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------- -------------------------
Title: President & CEO Title: President & CEO
---------------------- ----------------------
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TRENDS IN ASTHMA
Chronic lung diseases such as asthma, bronchitis and emphysema pose serious
challenges to both patients and health care providers. Despite an increased
understanding of these disorders, improved pharmacological therapies and a
greater awareness among potential sufferers, the incidence rates continue to
soar. In fact, between 1982 and 1993 the number of people reporting chronic
bronchitis increased seventy-nine percent, while those having emphysema and
asthma increased twenty-five and forty-eight percent respectively.(1)
Currently, over twelve million people suffer from asthma in the United States,
making it not only one of the nation's most common diseases but one of the most
costly as well.
INCREASE IN INCIDENCE RATES: 1982 - 1992
[GRAPH]
DEATH RATE FOR ASTHMA: 1982 - 1992 (PER MILLION)
[GRAPH]
While the reason for the rapid growth in the number of chronic suffers remains
uncertain, one thing is certain: these diseases pose a serious threat to
patients' well being. Despite tremendous advances in both diagnostic and
pharmacological therapies in recent years asthma continues to exact a tremendous
financial toll in terms of both direct and indirect costs.
---------------
(1) American Lung Association. Adapted from information published by the
Division of Epidemiology, National Heart, Lung and Blood Institute
IMPACT OF INCREASED PATIENT EDUCATION EFFORTS
The economic impact of asthma is staggering. In asthma patients diagnosed as
moderate to severe the annual cost of treatment often exceeds $100,000. In
fact, Xxxx Xxxxxxx Mutual Life Insurance Company in Boston has identified 1,300
patients whose care resulted in $28 million dollars in expenditures. Among the
most common reasons for exacerbation of symptoms are an inability of the
patients to self-manage their disease, poor pharmacological compliance, low
adherence to provider recommendations, a lack of patient knowledge concerning
their disease and failure of the provider to adhere to established treatment
guidelines; all areas that DSMI's-SM- asthma intervention program will impact.
- Study of severe asthmatics found 1,300 patients generated $28 million
in claims
- Highest individual level of asthma-specific costs was $126,343
- Highest expense for all care were for a 2 year old female - $584,211
- 235 members had claims exceeding $100,000 annually for treatment
Targeted educational intervention programs for asthma patients have proven
effective. A recent study, conducted at the National Jewish Center for
Immunology and Respiratory Medicine and the Xxxx Xxxxxxx Managed Care Group,
demonstrated significant improvements in patient outcomes for severe asthmatics
following a comprehensive initiative to educate patients.
PATIENTS ADMITTED WITHIN THE PAST 6 MONTHS
[GRAPH]
ADMISSIONS WITHIN THE PAST 6 MONTHS WERE LOWER IN PATIENTS RECEIVING TARGETED
SUPPORT.
Additionally, personalized asthma self management, which tailors program
materials to the individual, has demonstrated positive results in moderate to
severe asthmatics(2)(3). In a recent investigation incorporating targeted
support, the extension of face-to-face treatment via follow-up telephone calls
to the patient's home was rated more convenient and more acceptable to patients
than traditional group sessions (X.X. Xxxxx, personal communication, July 12,
1994). Finally, in a cost-benefit analysis of a self-management program for 47
adult asthmatics effectively reduced hospitalization cost form $18,488 to $1,538
and lost income from $11,593 to $4,589.(4)
---------------
(2) Kotses H., Xxxxx X., Environmental control of asthma self-management.
Journal of Asthma. 1990; 27:373.
(3) Kotses H., Xxxxx C., Xxxxx X.X., Individualized asthma self-management: A
beginning. Journal of Asthma. 1991; 288:287-289.
(4) Taitel M.S., A self-management program for adult asthma. Part II: Cost-
benefit analysis. Journal of Allergy and Clinical Immunology. 1995;
95(3):672-6.
FINANCIAL IMPACT OF ASTHMA
The following analysis reflects admission costs data for patients having severe
asthma. It reflects incident and admission rates for severe asthma as indicated
by the American Lung Association.
# of Covered Lives 500,000 500,000 500,000
Asthma Incidence Rate 0.05 0.05 0.05
# Asthma Patients 25,000 25,000 25,000
# Patients with Severe asthma 1250 1250 1250
Cost per Day as Inpatient $1,000.00 $1,000.00 $1,000.00
Average Length of Stay (days) 4 4 4
# Hospitalizations/year 3 2 1
Annual Hospitalization
Cost/Patient $12,000.00 $8,000.00 $4,000.00
Total Hospitalization Cost to
Plan $15,000,000.00 $10,000,000.00 $5,000,000.00
IMPACT OF DISEASE MANAGEMENT
PROGRAM
# of Patients Enrolled in DM
Program 1250 1250 1250
Estimated Operational
Costs/Patient $70.00 $70.00 $70.00
Total Operational Costs $87,500.00 $87,500.00 $87,500.00
PROJECTED REDUCTION IN ADMISSIONS
5% Reduction 5.00% 5.00% 5.00%
Annual Savings $750,000.00 $500,000.00 $250,000.00
7.5% Reduction in Admissions 7.50% 7.50% 7.50%
Annual Savings $1,125,000.00 $750,000.00 $375,000.00
10% Reduction in Admissions 10.00% 10.00% 10.00%
Annual Savings $1,500,000.00 $1,000,000.00 $500,000.00
% Success Rate Required to
Break Even 0.58% 0.88% 1.75%
# Pts. Avoiding Admission to
Break Even 7 11 22
EXHIBIT A
ASTHMA
DISEASE MANAGEMENT
PROPOSAL
-------------------------------------------------
PRESENTED BY
Patient Infosystems, Inc.
00 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
000-000-0000
RATIONALE:
Asthma places a tremendous burden on patients and health care providers and
demands a significant portion of our nation's health care dollars. Patient
Infosystems, Inc. is committed to improving health outcomes through the
application of state of the art technologies to the care and treatment of
asthma. Our proprietary interactive voice recognition systems, enhanced
database modeling techniques, and on-demand publishing combine to provide the
powerful educational intervention necessary to enhance patent adherence to
treatment recommendations, empower patients to self-manage their disease and
provide immediate referrals when specific critical triggers are met.
PROGRAM DEVELOPMENT:
Patient Infosystems, Inc.'s staff, clinical experts and physician consultants
performed a comprehensive review of asthma to insure that the National Heart,
Lung, and Blood Institute's guidelines form the program's foundation.
Recognized leaders in outcomes management provided guidance throughout the
project development process.
PROGRAM INTERVENTION STRATEGIES:
Patient Infosystems, Inc.'s core asthma patient intervention program consists of
six interactive voice response based telephone interventions. Each contact
generates an on-demand personalized patient report targeting the patient's
status in relation to the specifics of their asthma condition. The patient will
also receive patient educational materials designed to reinforce their awareness
and knowledge regarding their condition and promote their treatment adherence.
Additionally, the patient's physician/health care provider will receive an
at-a-glance formatted report for review and inclusion in the patient's medical
records. These reports highlight specific areas of concern of the patient and
demonstrate areas of a patient's adherence to the prescribed therapy.
Each intervention is uniquely structured to target specific behaviors such as
recognition of symptoms and triggers, encourage compliance with trigger
avoidance, medications and self-management and provide for Quality of Life
measurements. By providing unique, individually tailored intervention
strategies, Patient Infosystems, Inc. highlights areas where noncompliance and
poor self-management impact the plan's expenditures. The program also provides
an active intervention to modify "at risk" behavior before an emergency room
visit or hospitalization occurs. These intervention strategies also provide the
patient with encouraging feedback and positive reinforcement with respect to
their personal health management.
CRITICAL EVENTS:
As an extra feature, Patient Infosystems, Inc.'s clinical staff establishes
specific critical event triggers that are monitored at each intervention.
Patients meeting specified criteria demonstrating an increased risk of
hospitalization, emergency services or other costly intervention will have their
physician/health care provider notified the day of the intervention by means of
a faxed report. This critical event notification and tracking of key indicators
has demonstrated a reduction in the global cost of managing chronically ill
patients.
DATA MEASUREMENTS:
In addition to providing ongoing support for patients, Patient Infosystems,
Inc.'s fully integrated systems approach allows for immediate on-line data
collection and evaluation. Programs may be customized to include administration
of HEDIS, Health Quality, patient satisfaction, NCQA and Quality of Life surveys
without operator induced bias. The process streamlines data collection and
provides a cost effective method to query patients.
2
PROGRAM OVERVIEW
The following intervention schedule will be delivered to patients who are
enrolled in the program. See the "Program Intervention Description" section
for details about each of the interventions. See the "Program Schedule Summary"
for the delivery schedule of each intervention. Note that the term
"physician/health care provider" is used to denote a physician, case manager
or other health care provider designated to receive communications regarding
the patient.
I. PROGRAM COMPONENTS
- Enrollment form
- Patient diary
- Program description/overview brochure
- Six (6) Interactive Voice Response (IVR) telephone contacts
- Six (6) on-demand published personalized patient reports
- Patient educational materials - one per call
- Six (6) on-demand published physician/health care provider reports
- Critical trigger notification
- Voice demonstration line
- Logo integration
II. PROGRAM INTERVENTION SCHEDULE:
CALL #1:
- Patient enrollment via enrollment form
- Initial telephone intervention within ten days of enrollment
- Patient receives on-demand published report following IVR intervention
- Appropriate patient educational materials and diary sent to patient
- Physician/health care provider receives on-demand published, patient
specific report for review and inclusion in patient record following IVR
intervention
- Additionally physician/health care provider receives same day notification
via fax for any patient reporting status indicating a critical trigger has
been met
CALLS #2, 3, 4, 5, 6:
- Patient receives an IVR based telephone intervention per program schedule
summary
- Patient receives on-demand published report following each IVR intervention
- Appropriate patient educational materials sent to patient
- Physician/health care provider receives on-demand published, patient
specific report for review and inclusion in patient record following each
IVR intervention
- Additionally physician/health care provider receives same day notification
via fax for any patient reporting status indicating a critical trigger has
been met
III. INTERVENTION SCHEDULE SUMMARY:
The program consists of a schedule including 6 telephone interventions, 6
patient reports, 6 physician/health care provider reports, 6 patient educational
materials and critical trigger reporting when a patient reports a crisis. The
schedule is carried out over an 8 month period.
---------------------------------------------------
CALL # 1 2 3 4 5 6
---------------------------------------------------
MONTH # 1 2 3 4 6 8
---------------------------------------------------
---------------------------------------------------
IVR Intervention - - - - - -
---------------------------------------------------
Patient Report - - - - - -
---------------------------------------------------
Physician/Health - - - - - -
Care Provider
Report
---------------------------------------------------
Patient - - - - - -
Educational
Materials
---------------------------------------------------
Critical Trigger - - - - - -
Reporting
(faxed as needed)
---------------------------------------------------
PROGRAM INTERVENTION DESCRIPTION
See the "Program Schedule Summary" section for an outline of the schedule for
delivering these program components. Note that the term "physician/health care
provider" is used to refer to a physician case manager or other health care
provider designated to receive communications regarding the patient.
ENROLLMENT FORM/PROGRAM DESCRIPTION
- One (1) page mailer to be distributed by providers to patients and
returned via postage paid mail
- Provides brief assessment for gathering patient data (e.g., name,
phone number, best time to contact, physician/health care provider fax
number, and identification number). Necessary for Patient
Infosystems, Inc. to initiate a telephone call to patient
- Program description includes a brief program overview for patient
INTERACTIVE VOICE RECOGNITION TELEPHONE INTERVENTIONS
- Six interactive voice recognition based telephone interventions
initiated by live operators to patients at preferred contact times
- Patient receives personalized questions and clinically appropriate
feedback driven by expert system to promote awareness of condition and
adherence to treatment regimen
- Follow-up assessment of relevant medical and behavioral factors:
update on disease status, prescribed treatment including diet,
exercise, and medications, patient motivation, treatment barriers,
patient knowledge indicators regarding symptom identification and
disease self-management
- Allows identification of patient concerns
- Operator-initiated contact to identify patient and transfer to
automated, voice response system
- High appeal voice response system using a recorded human voice versus
computer synthesized speech
- Patient responds in normal speaking voice versus pushing touch tone
buttons
- Adds vital progress information to the longitudinal patient database
PERSONALIZED PATIENT REPORTS
- Laser printed, on-demand published report including personalized
self-reported response data
- Mailed to patient within a week after each telephone intervention
- Black and white/greyscale logo to be used on report as program
identifier
PATIENT EDUCATIONAL MATERIALS
- Educational materials designed to reinforce patient awareness and
knowledge regarding their condition and promote treatment adherence
PHYSICIAN/HEALTH CARE PROVIDER REPORTS
- One page laser printed, on-demand published report integrating
patient's self-reported response data
- Mailed to patient's physician/health care provider within a week after
each patient intervention
- "At-a-glance" format provides efficient documentation of critical
patient data, ready for review and inclusion into the patient's
medical record
- Highlighted notification that the patient is not following specific
treatment guidelines
- Black and white/grayscale logo to be used on report as program
identifier
- Facilitates identification of patient education needs and
hard-to-manage patients and appropriate allocation of health care
resources
- Enhances patient-physician/health care provider communication
CRITICAL TRIGGER REPORTING
- Physicians/health care providers will be notified via fax when patient
reports symptoms, noncompliance or other critical factors indicating
an increased risk for an acute event, hospitalization or emergency
procedure
- Notification will occur the day of the intervention
- Notification will be a faxed critical physician/health care provider
report
- Black and white/grayscale logo to be used on report as program
identifier
CLIENT REPORTING
- Patient Infosystems, Inc. will provide standard aggregate outcomes and
demographic reports quarterly
CUSTOMIZATION
Customization and modifications to the core program features and schedules are
available. Cost estimates for alterations will be furnished upon identification
of revised program specifications.
